Commentary

In this second part of our exclusive Cannabis Corner series, CERESLabs Barot delves into the beginnings of the cannabis market in the US, then onto its criminalization and to the present where its rapidly becoming legal.

Broker dealers' best execution guidelines aren't always clear for the exchange's members under the current rules, wrote Meyer Sandy' Frucher, chairman of the PHLX.

"Rules that promote internalization, facilitation, crossing and similar practices by exchange members clearly create opportunities for such members to benefit from order flow received from their customers (or purchased from others) through increased trading opportunities and commission revenues," Frucher wrote in a letter to the SEC.

Order Routing

"Whether a firm is likely to wantonly trade," Frucher continued, "against internal order flow to the detriment of customers, by not aggressively seeking the best price, depends primarily upon the integrity of the management of the order routing firm and, secondarily, upon the various safeguards built into the system."

Frucher noted that some of these safeguards are required by the rules of the exchanges.

The SEC started this debate back in January when it sent a letter to the heads of the five options exchanges warning that payment for order flow "encourages firms to consider their own economic interests over those of their customers."